Eric Hovde, a potential challenger to Democratic U.S. Sen. Tammy Baldwin, gives the toast at the Presidential Dinner hosted by the Milwaukee County Republican Party at Serb Hall in Milwaukee.(Photo: Mike De Sisti / Milwaukee Journal Sentinel)Buy Photo

MADISON - Potential U.S. Senate candidate Eric Hovde did not have to pay Wisconsin income taxes in 2015, even though the Madison investor is a millionaire many times over.

The developer and banker reported that he did not owe the state any taxes in 2015 after paying a total of nearly $384,000 in the three previous years combined, according to the tax records for potential candidates for senator and governor.

The Milwaukee Journal Sentinel review also found that Democratic businessman and gubernatorial hopeful Andy Gronik paid far less in taxes to the state in 2014 after leaving his chief executive job at two companies amid a lawsuit.

In an interview, Hovde said he would give reporters access to his tax returns if he does run for Senate but is otherwise reluctant to discuss his private finances. He said that he follows the law and that his tax liability is affected by expenses, investment losses and depreciation of real estate.

"Some years you pay an ungodly amount (in income tax) and some years don't pay as much because you have a big depreciation," said Hovde, who in 2012 pegged his assets at more than $100 million.

In the 2010 GOP Senate primary, Madison developer Terrence Wall faced scrutiny for paying no state income taxes in nine of the 10 previous years. The millionaire said he had used legitimate tax deductions and credits but ultimately dropped out.

The Journal Sentinel requested state income tax information for the likeliest 2018 candidates, including Democratic U.S. Sen. Tammy Baldwin and GOP Gov. Scott Walker. The data shows only the taxes owed — not the full tax returns that would reveal income, losses and any credits or deductions claimed.

The taxes include the years 2011 to 2015 for all contenders but 2016 was not yet available for some of them like Hovde because of factors such as an extension.

Hovde also reported no state income tax owed on his Wisconsin operations in 2010. But that was not as significant because Hovde was not living in Wisconsin at that time.

In 2012, Hovde spent more than $5 million of his own money on an unsuccessful Senate GOP primary bid. He has recently sold more than $14 million of stock in one company, spurring talk he may self-fund another campaign.

For her part, Baldwin receives $174,000 a year as a senator and paid the state about $8,800 in income taxes in 2015 and 2016. That’s down from the more than $13,000 she paid in 2011 and 2012.

Businessman and former Marine Kevin Nicholson, another Republican considering a challenge to Baldwin, owed $15,700 in 2015, up from $12,200 the year before and $8,300 in 2013.

Another possible GOP challenger, state Sen. Leah Vukmir of Brookfield, had a $2,600 income tax bill in 2016 — she has paid roughly the same amount each year since at least 2011. As a state senator, Vukmir makes $51,000 a year.

During the 2012 campaign for Senate, Baldwin made public 10 years of state and federal tax returns. That year, Hovde released no state tax returns but did let reporters review two federal tax returns.

Hovde's returns showed that he paid $315,900 in federal taxes in 2011 on adjusted gross income of $2 million and paid $1.4 million in 2010 on $5.8 million in adjusted income.

First with his father Don and then with his brother Steve, Eric Hovde built up businesses providing services to saving and loan banks; investing the assets of his family, foundations and pension funds; and managing and developing real estate in Madison. In addition to running a hedge fund focusing on the financial sector, Hovde also bought controlling stakes in at least eight community banks.

Since returning to Wisconsin in 2011, Hovde said he has been more involved in real estate. Over the years, he has also made substantial donations to a family foundation that funds medical research and homes for vulnerable children.

Todd Berry, president of the Wisconsin Taxpayers Alliance, said it is not unusual for people who invest heavily in real estate to have large fluctuations in their tax liabilities from year to year.

"The potential for those numbers to be bouncing around from year to year is quite a bit," said Berry.

Hovde said he would decide on a Senate run after his youngest daughter heads to college this fall.

"I've been called by a thousand people and it's always the same thing: 'I don't know,' " he said.

Governor's race. Gronik, the Democratic businessman considering a challenge to Walker, paid $141,900 in state income taxes in 2012 and $171,900 in 2013. But as he left his businesses, his state taxes plummeted to $5,500 in 2014 and $6,000 in 2015.

After a lawsuit with his longtime business partner, Gronik stepped down in October 2013 as chief executive officer of AccuVal Associates Inc. and LiquiTec Industries Inc. and sold his interest in those two firms he co-founded.

Gronik said if he runs in 2018, he would invest his own money in his campaign but didn't say how much.

"I will not be fully self-funding. I think it's wrong in politics and wrong in our state," Gronik said.

For his part, Walker makes $147,300 as governor and paid $8,400 in state income taxes for 2016. He has typically paid about that each year going back to 2009, though he paid $12,400 in 2013.

Madison Mayor Paul Soglin, another potential Democratic challenger to Walker, earns $139,900 a year from his job and paid $7,300 in state income taxes for 2016.

Attorney and state Rep. Dana Wachs (D-Eau Claire) owed $29,500 in income taxes in 2015 — more than what he owed in 2013 and 2014 but down slightly from 2012. His tax bills suggest Wachs has the resources to fund part but not all of a run against Walker.

State Sen. Kathleen Vinehout of Alma, who filed paperwork this month to explore a run for governor, paid $600 state income taxes in 2016 and less than $800 in 2013, 2014 and 2015. That was a big drop from 2012, when she had a $14,900 tax bill because of a land sale.

Vinehout, who makes $51,000 a year as a lawmaker, said her tax bill has been down because her husband is retired and the couple's organic hay farm has had a few tough years.

Mike McCabe, a liberal activist considering a governor's run, owed $8,700 in taxes in 2016, up from $6,700 in 2015.